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Intellectual capital accounting and reporting in the knowledge economy

Intellectual capital accounting and reporting in the knowledge economy Claims the greatest challenge facing the accounting profession is understanding the huge difference between its balance sheet and market valuation. This gap represents the core value of the company - its intellectual capital represented by brands, products, competitive advantage, patents, trade marks, customer relationships, R&D, human capital etc. The present financial accounting framework is criticised, especially in the USA and Europe, as inadequate and failing to communicate the most important assets and resources of today's business, known as intangible assets or intellectual capital. As a result, there is a huge value gap and distortions between a business entity value as reported in the financial statements with the value put by investors on the stock market or even in merger and acquisitions cases. In the new knowledge economy (k-economy), knowledge rather than physical assets drives innovations, revenue and profits growth, and nurtures new competitive advantages. Looks at the challenges encountered by accounting and where it is heading in the k-economy environment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Capital Emerald Publishing

Intellectual capital accounting and reporting in the knowledge economy

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Publisher
Emerald Publishing
Copyright
Copyright © 2002 MCB UP Ltd. All rights reserved.
ISSN
1469-1930
DOI
10.1108/14691930210424734
Publisher site
See Article on Publisher Site

Abstract

Claims the greatest challenge facing the accounting profession is understanding the huge difference between its balance sheet and market valuation. This gap represents the core value of the company - its intellectual capital represented by brands, products, competitive advantage, patents, trade marks, customer relationships, R&D, human capital etc. The present financial accounting framework is criticised, especially in the USA and Europe, as inadequate and failing to communicate the most important assets and resources of today's business, known as intangible assets or intellectual capital. As a result, there is a huge value gap and distortions between a business entity value as reported in the financial statements with the value put by investors on the stock market or even in merger and acquisitions cases. In the new knowledge economy (k-economy), knowledge rather than physical assets drives innovations, revenue and profits growth, and nurtures new competitive advantages. Looks at the challenges encountered by accounting and where it is heading in the k-economy environment.

Journal

Journal of Intellectual CapitalEmerald Publishing

Published: Jun 1, 2002

Keywords: Knowledge; Economy; Financial reporting

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